Renting vs. Buying: Determining the Best Option for Your Lifestyle
When it comes to finding a place to live, buying has traditionally been favored over renting. Some consider renting to be “throwing away money” while they consider buying an “investment.” So, the question is: Should I rent or should I buy? The answer isn’t so simple. Many factors determine the best options for your lifestyle. Read on for the vital things to consider to help you decide upon your next move.
Cost Differences
The cost differences between renting a home vs. owning one can vary widely depending on your local market. For homebuyers, the down payment is a significant cost. It’s also often something that deters or even prevents people from homeownership. This down payment, while substantial, can vary widely depending on what type of loan you are getting and the total amount of your loan. Renting doesn’t require a down payment, which is an appealing factor for many. However, most rental properties will require a security deposit. This protects the landlord financially if the property is damaged during the lease. Most security deposits are 2-3x the monthly rental cost. Depending on your local market, the security deposit on a rental and down payment on a mortgage may be similar. Ask yourself the following questions: How much can I afford monthly housing costs, and am I prepared for a long-term financial commitment?
Lifestyle Differences
Another noteworthy consideration for renting vs buying is your lifestyle. Rentals typically have a one-year lease. Homeownership, on the other hand, is much more long-term. Rentals may be a good choice for those looking to avoid being tied down to one place for a long time. In contrast, homeownership may provide a sense of stability. Another significant lifestyle difference to remember is that repairs are handled differently in a rental vs a home you own. In a rental, the landlord is responsible for repairs, whereas in an owned home, you are responsible for repairs. If you are a do-it-yourself type, you may become impatient waiting for a landlord to find someone to fix your leaky sink. To help you decide to rent vs own, ask yourself the following questions: What are my goals for the future, and am I prepared to tackle home maintenance and its costs?
Building Equity
There is a reason why homeownership is considered a financial investment. Homebuyers accumulate equity over time as they pay off their mortgage. If your home value increases, you’ll earn money when you sell. If you purchase with a fixed-rate mortgage, you won’t have to worry about your monthly payments changing as you could with rising rents. In a rental, you do not gain any equity, and you never see a return on the money you put into your monthly rent. No return on investment is one reason some consider renting a “waste” of your money. Before deciding to rent or purchase, ask yourself if you are ready to make a considerable investment.
The answer to the rent vs. buy question is challenging and is different for every person. Evaluating your current life situation and how much it’s likely to change in the future can help you decide. Renting can be an excellent option for people who are not looking for something long-term or want less financial responsibility. However, if you’re feeling financially stable and ready to settle down, buying is likely a better option.
If you need help determining which is suitable for you, contact a Calcagni agent. Our experienced team can help you weigh your options and make a more informed decision. Once you decide, we can help you purchase your dream home or find your dream rental!
